CFPB Proposed Rule Amends CARD Act to Benefit Non-Working Spouses

The Consumer Financial Protection Bureau has proposed scrapping a provision of the CARD Act that prevents non-working spouses from applying for credit cards in their own name.

The proposed rule would allow stay-at-home spouses or partners to use shared household income when applying for credit.

“When stay-at-home spouses or partners have the ability to make payments on a credit card, they should be able to obtain a card in their own name,” CFPB Director Richard Cordray said Wednesday.

“The CFPB is proposing common-sense changes that would facilitate credit access for spouses or partners who do not work outside the home,” Cordray said.

The CARD Act requires that card issuers evaluate a consumer’s ability to make the necessary payments before opening a new credit card account. Under current regulations issued by the Federal Reserve, a card issuer generally may only consider the individual card applicant’s income or assets.

The CFPB said data made available to the bureau suggest that some otherwise credit-worthy individuals have been declined for credit card accounts under the current regulation, even though they have the ability to pay.

Discussions with industry sources indicate that a significant number of these individuals may be stay-at-home spouses or partners with access to income from an employed spouse or partner.

The issue gained national attention when Holly McCall, a stay-at-home mom, was denied a credit card despite having what she called “an impeccable” credit score. McCall initiated a campaign on Change.org in partnership with the grassroots advocacy group MomsRising that caught the attention of the CFPB and Congress.

“We want to thank our member, Holly McCall, for drawing attention to this problem and Congresswomen Carolyn Maloney and Shelley Capito for their work to get the rule changed. We also thank our members and the more than 40,000 moms and others who signed our petition protesting the law for their efforts,” said Kristin Rowe-Finkbeiner, executive director and CEO of MomsRising. The bureau’s proposed revision would allow credit card applicants who are 21 or older to rely on third-party income to which they have a reasonable expectation of access.

Although the proposal applies to all applicants regardless of marital status, the bureau said it expects the change to ease access to credit particularly for stay-at-home spouses or partners who have access to a working spouse or partner’s income.

According to the Census, more than 16 million married people do not work outside the home, representing one out of every three married couples.